McDonald’s is expected to generate a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to about $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
This promotion aims to entice budget-conscious consumers back to its outlets, encouraging them to purchase more items beyond the $5 offer. However, profitability will be influenced by various factors, including the costs of ingredients, labor, and overhead.
Consulting expert Arlene Spiegel described the $5 meal deal as “more promotional than profitable.” She noted that even if the offering successfully attracts more customers, it does not guarantee that franchise owners will benefit from the profits. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners determine their pricing and bear additional expenses such as rent, insurance, and taxes.
In a statement earlier this year, McDonald’s U.S. president Joe Erlinger mentioned that franchisees employ promotional strategies, like the $5 meal deal, to manage their overhead costs. Nevertheless, Spiegel emphasized that this deal functions primarily as a “loss leader” intended to draw in and retain customers. She further explained that when factoring in costs related to labor, packaging, condiments, delivery, and marketing, franchise owners often find that their profits from the deal are significantly diminished.